Selling up, moving on

IBM's PC division sell-off is good news for its channel partners

Spare me the sentimentality. The news that IBM is to sell its PC division to Lenovo Group is not the end of an era. It is a smart strategic decision that will benefit the vendor and its channel partners.

In 2002 Big Blue sold off its PC manufacturing division to Sanmina SCI, in a move that the industry saw purely as an outsourcing deal.

IBM has been buying up services and software companies like they're going out of style; two in Denmark, Maersk Data and MDdata, and Canadian firm Systemcorp in the past six weeks alone.

And in the firm's latest results, while the PC division posted an annual turnover of $12bn - hardly a figure to be sniffed at - the profit on this amounted to less than one per cent of IBM's total profit.

IBM, according to research firm Gartner, is currently running a disappointing third in terms of PC shipments. And it's not even a close call. The firm is quite a significant way behind second-placed Hewlett-Packard and Dell in pole position.

Taking all these factors into consideration, not to mention the complete commoditisation of the PC market, it is no real surprise that IBM made this move.

For PC-only resellers Big Blue's decision will have massive repercussions. But then again, if selling PCs is your only business, your company was already in trouble.

For the majority of IBM resellers whose business is based on offering a consultative service or server-based sales, the move is better news, because it will mean a spring-clean of the vendor's channel.

Clearing out the low-margin, volume PC players will leave more of Big Blue's attention and marketing funds available for their support.

Although some have commented that the move could leave IBM and its partners without an initial entry to a deal through cheap PCs and laptops, which often leads to higher-margin consultancy deals, the brand name of IBM may be enough to carry the vendor and its partners into these deals anyway.

And for users, and indeed partners, PCs can be sourced exceptionally cheaply through other sources.